Betting exchanges

Nobody on the other side

A book sets a price and takes the other side of your bet, so if you win, the book loses. An exchange has no side. One player offers a price, another takes it, and the exchange earns its commission whoever wins. It has no opinion on the game and no reason to want you to lose, which is more than I could ever say for myself when I was writing bets.

Backing and laying

To back is to bet that something happens, as you would at a book. To lay is to bet that it does not happen: you are taking somebody's bet, which makes you the bookie.

Exchange prices are usually shown as decimals. A price of 3.0 means $100 returns $300 in total, the same as +200 (the guide to reading odds covers the formats). At that price the two sides look like this:

• Back $100 at 3.0: you win $200, or you lose $100.
• Lay $100 at 3.0: you win $100 if it loses, and you pay $200 if it wins.

That $200 is your liability, and the exchange holds it out of your balance as soon as the bet is matched. When you lay, it's the liability you should be looking at, not the stake. Laying $50 at 11.0 puts $500 at risk, and I'd size that bet against the bankroll by the $500.

The commission

The exchange charges a commission on net winnings, and a losing bet pays nothing. The rate varies by exchange, and sometimes by market or by how much you bet. It is published, so look it up.

Take 5 percent as an example. You back $100 at 2.0 and win $100; the exchange keeps $5 and you keep $95. That is the same as betting at about -105, and your break-even is 51.28 percent against 52.38 percent at a book's -110.

On a busy market the exchange price after commission is often better than the book's. That is the whole attraction, and it's why you want to understand the vig before you compare. I'd compare every time and take whichever pays more.

Is anyone there

A bet on an exchange exists only if someone takes the other side. On a big game there is plenty of money waiting near the fair price. On a small one you may find $40 available at the price you want, or nothing at all, and a bet that isn't matched sits there as an offer that can be matched in part. So look at the amount available as well as the price before you count on it.

What a book won't let you do

The plainest one is betting against something. Laying one team to win a title is a single bet, where at a book you would have to back all the others. You can also ask for a price: post an offer above the current odds and wait to see if anyone takes it.

Then there is trading out. Back $100 at 3.0, and if the price shortens to 2.0, lay $150 at 2.0. Now you win $50 whichever way it goes, before commission. It is a hedge made at a market price, and I like it better than most hedges for exactly that reason.

And you can keep winning. An exchange has far less reason than a book to limit a winner, because your winnings come out of another player's pocket, not its own (some do charge their most successful players a higher commission, so it isn't free).

Why bookies watch them

Bookmakers use exchanges as well, to lay off risk they don't want to carry. The price on a busy exchange market is also one of the better guides to the true odds, because anyone with an opinion and money can move it. Where I could see one, I would check it before taking any book's price.

Exchanges are common in some countries and scarce in others, and the United States is one of the others. Whether you can use one depends on where you live.

On an exchange you finally get to be the bookie. The liability comes with the job.